HALISTER1: Fed to Stick With 3 Hikes a Year, Given Inflation, BofA Says

Fed to Stick With 3 Hikes a Year, Given Inflation, BofA Says

(Bloomberg) -- While inflation has been slower than expected, underlying pressures remain intact, which should allow Fed to stick with its plan to normalize policy, BofA economist Alexander Lin wrote in note.
  • Inflation is set to finish slower this year after two straight disappointing CPI reports
  • BofA estimates 4Q core CPI inflation will be 1.9% y/y vs prior estimate of 2.3%; should rebound to 2.2% by end-2018
    • 4Q core PCE forecast is now 1.7% y/y vs prior estimate of 1.9%
  • Main takeaway from revised estimates is that inflation is still set to move higher, yet it will happen later
  • “Underlying inflation pressures remain intact,” which should allow Fed to stick to its plan for three hikes per year

Alert: HALISTER1
Source: BFW (Bloomberg First Word)

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Alexander Lin (Bank of America Corp)

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BGOV Finance

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